92.5 Mn sq.ft. of branded housing in top tier 1, 2, 3 cities over next 2 Years

• The top 7 listed players will develop approx. 92.5 Mn sq. ft. in top 7 cities and tier 2 & 3 cities in the next 2 years
• Kochi, Coimbatore, GIFT City, Hosur, Thrissur & Trivandrum prominent tier 2 & 3 for their expansion plans
• Bengaluru is most preferred with all top 7 listed players set to launch new projects there; MMR & Chennai in 5 listed developers’ expansion plans
• In FY2021, total new launches by the top 7 listed players rose 11% over FY2020 – from approx. 28.3 Mn sq. ft. in FY2020 to approx. 31.37 Mn sq. ft. in FY2021
• COVID-19 is a major factor refocusing listed players’ spotlight on tier 2 & 3 cities 

Leading listed developers continue their winning streak, with homebuyer preferences increasingly favoring them. Listed players now have their crosshairs trained on tier 2 and 3 cities – for instance, Bengaluru-based Puravankara Ltd. and Sobha Ltd. will expand into Kochi, Coimbatore, GIFT City, Hosur, Thrissur, and Thiruvananthapuram. Southern India is a major focus area for these players.

The listed developers considered are Brigade Enterprises, Godrej Properties, Kolte-Patil, Mahindra Lifespace Developers, Prestige Estates, Puravankara Ltd, and Sobha Ltd.

Data from the financial presentations of the top 7 listed realty companies reveals that they are gearing up to launch approx. 92.5 Mn sq. ft. of new residential space within the next 1-2 years. Apart from the top 7 cities, they are also zeroing in on these major tiers 2 and 3 cities – and at least 70-75% of this supply may be launched in FY2022 itself.

These listed developers’ corresponding financial presentations data from previous financial years indicates a steady y-o-y growth in new launches. Despite COVID-19 in FY2021, the total new launches by these top 7 listed players rose by 11% against the preceding FY – from approx. 28.3 mn sq. ft. in FY2020 to approx. 31.37 mn sq. ft. in FY2021.

The current expansion pipeline of approx. 92.5 Mn sq. ft. clearly indicates that strong listed developers will continue to dominate the new residential supply and accelerate their market share gain.

“COVID-19 has driven a lot of latent demand into tier 2 and 3 cities,” says Anuj Puri, Chairman – ANAROCK Property Consultants. “This demand is driven by the improved economic growth, infrastructural developments, lower cost of living, and more attractive real estate prices in these cities. However, the new work from home dynamic has worked most strongly in their favor as they continue to attract migrant professionals riding on the WFH option.

The days when these cities’ residential supply was dominated by local players will soon be over. Demand is also chasing projects by leading developers, so their expansion into tier 2 & tier 3 cities is a given.

“These players have extremely ambitious expansion plans for the next two years,” says Puri. “Even if 70% of their total projected new supply of approx. 92.5 Mn. sq. ft. is launched in FY2022, they will have doubled their footprint as against the preceding financial year 2021, when they launched approx. 31.37 Mn sq. ft. residential space.”

Source: Company Presentations & ANAROCK Research

New Supply Follows Demand

Source: Company Presentations & ANAROCK Research

The robust housing sales by the top 7 listed real estate players in the previous financial years have been a huge confidence booster for them. Data indicate that these listed players cumulatively sold approx. 32.61 Mn sq. ft. of housing in FY2021 despite the pandemic – an increase of 7% over FY2020, when approx. 30.45 Mn sq. ft. area was sold.

The direction of housing demand after the pandemic started unfolding now guides their next steps – tier 2 and tier 3 cities are definitely the new growth precincts to explore.